Munce's Superior Petroleum Products, Inc. v. N.H. Department of Environmental Services (In re Munce's Superior Petroleum Products, Inc.)
- Summarized by Michael Sugar , Commonwealth of Massachusetts
- 11 years 1 month ago
- Citation:
- No. 13-1380
- Tag(s):
-
- Ruling:
- The First Circuit Court of Appeals upheld the bankruptcy court's finding that a post-petition civil contempt award issued against Munce's Superior Petroleum Products, Inc. (the "Debtor") in favor of the State of New Hampshire ("New Hampshire") was entitled to administrative priority status. The court upheld the bankruptcy court's finding that the civil contempt award constituted an actual and necessary cost of administering the estate because the award was based on the Debtor's post-petition non-compliance with an order of a New Hampshire State Court (the "State Court"). Additionally, the First Circuit upheld the bankruptcy court's decision that a fine did not need to compensate a specific party because a debtor was not entitled to disregard environmental laws and paying a fine related to non-compliance with environmental laws is an ordinary cost associated with doing business.
- Procedural context:
- New Hampshire moved to have a civil contempt penalty, assessed against the Debtor post-petition, to be deemed as an administrative expense. The bankruptcy court granted New Hampshire's motion. The decision was upheld on appeal to the district court and the First Circuit Court of Appeals.
- Facts:
- The Debtor is in the business of fuel distribution and operated three fuel storage facilities. Under New Hampshire law, these storage facilities are required to have certain safeguards designed to protect against catastrophic spills. The facilities operated by the Debtor lacked the necessary safeguards. In 2010, prior to the Debtor filing for bankruptcy protection, New Hampshire sued the Debtor to compel the Debtor to add the necessary safeguards (the "State Court Action"). The Debtor agreed to a consent decree but failed to comply with the decree. While a contempt motion regarding the consent decree was pending in the State Court Action, the Debtor filed for bankruptcy protection. After the bankruptcy court determined that the Debtor's automatic stay did not affect the State Court Action, the state court found the Debtor in contempt of the consent decree and ordered civil penalties if the Debtor failed to comply with the consent decree. At a subsequent hearing, the state court issued a civil contempt penalty in the amount of approximately $195,000 against the Debtor for its continued failure to comply with the consent decree after it issued its first ruling on the contempt motion.
- Judge(s):
- Lynch, Selya, & Hillman (sitting by designation from D. Mass.). Opinion by Lynch
ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!
